Through E-Business, Information Communications Technology (ICT) has change the way trade and commerce is carried out. The developed nations of the world are taking advantage of these new technologies to expand their markets. Many countries, developed as well as developing, encourage the SMEs to form clusters to strengthen their marketing and buying power. Clustering, is found to be a good strategy for SMEs all over the world to accept as a means to achieve competitive advantage.

In this paper, the Seven E?s in eTransformation, a model developed by the University of Western Sydney, that is being successfully used with SMEs in Australia is applied as the approach to eTransform industries in developing countries towards eBusiness. The model incorporates new business thinking, business models in the new e-economy and it also depicts how clustering can be used to gain competitive advantage. The ceramic industry sector in Sri Lanka is being used for the study of eTransforming a cluster of organisations.